2/11/2010 @ 7:20PM

Motorola To Split In Two

Citing the need to better position its device and infrastructure businesses amid fierce competition,
Motorola
said Thursday it will split into two publicly traded companies in early 2011.

The mobile devices giant initially floated the idea of a split between its handset and other units about a year ago. On Thursday it revised its plan to one that combines its mobile devices and home units into a consumer-focused company and its enterprise mobility and networks units into a company targeted at government and corporate customers.
Motorola
Co-Chief Sanjay Jha will head the mobile company while fellow Co-Chief Greg Brown leads the enterprise business.

While the separation isn’t expected to happen until the first quarter of 2011, Jha and Brown’s new roles are effective immediately. Motorola shareholders will get a tax-free stock dividend of shares in the new companies.

During a Thursday analyst call that detailed the news, both executives talked up the synergies that would result from the split. The new devices business, which will comprise cellphones and cable set-top boxes, will be able to focus on the consumer and carrier market, Jha said. Brown noted that the enterprise business, relieved of the home networking unit, would be better positioned to cater to the government agencies that buy the bulk of its two-way radios and wireless broadband systems.

Jha was particularly effusive about the possibility of streaming media between Motorola-designed phones and televisions. At the January Consumer Electronics Show Motorola exhibited a service called Motorola Mover that pushed digital content between set-top boxes and mobile devices. “There’s no reason services running on our handsets wouldn’t be relevant to TV,” Jha said. “We will be uniquely positioned to be a leader in the convergence of mobility, media and the Internet.”

Analysts appeared skeptical, however, peppering Brown and Jha with questions about the timing of the announcement and whether the mobile devices unit, which is not yet profitable, would be able to survive without support from Motorola’s more profitable enterprise units.

Brown said the company decided to reveal its plans early to give customers, employees and investors “greater clarity” and ensure adequate time to untangle the various businesses. Jha said he expects the mobile devices unit to release 20 smart phones and turn a profit by the end of the year.

The company also addressed questions that had cropped up earlier regarding a possible split, such as which division would get the Motorola brand and how it planned to divide its sizable patent portfolio. After the separation, both companies are expected to share the Motorola name, with the mobile devices business licensing the name royalty-free to the enterprise business. The mobile business will get patents related to phones, cellular connectivity and rights management of media content while the enterprise business will take any intellectual property that concerns wireless networking and radio devices, Brown said.

One analyst raised doubt that the split would actually happen, referencing the months of delays, vague responses and rumors that dogged the company’s original plan. In response, Jha said that Motorola is “fully committed” to making a final separation. The company’s board of directors has already approved the proposal.